President Trump said on Sunday evening that the Federal Reserve was right to keep the interest rates unchanged during her policy meeting last week.
“I was not surprised,” he told reporters when he was asked to keep his response to the decision of the Central Bank to keep the loan costs stable after three consecutive rate reductions at the end of 2024.
“I think holding the rates at the moment was the right thing to do.”
Read more: Fed Rate decision: how this influences your bank accounts, loans, credit cards and investments
The new comments from the president about monetary policy came 10 days after Trump said he would “demand” lower rates.
It also coincides with a roll -out of its tariff plans for the largest trading partners in America who predict some economists and Fed Watchers will have an effect on the path of inflation and the tariff plans of the Central Bank.
President Donald Trump speaks on Sunday with reporters next to Air Force One. (AP Photo/Ben Curtis) ·Associated Press
Trump said on the weekend that he was planning to levy 25% rates for all Mexican and Canadian goods from Tuesday (except a lower rate of 10% on the import of Canadian oil) and a rate of 10% on China.
On Monday he said that he was planning to pause the Mexican rates for a month after that country agreed to put 10,000 troops on the border to “stop the flow of fentanyl and illegal migrants”.
Some Fed Watchers said that the new rates that are outlined by Trump will push the inflation higher, which means that each percentage of reductions in 2025 are now off the table.
“The resulting increase in the American inflation of these rates and other futures measures will be even faster and be larger than we initially expected,” said Paul Ashworth, Chief Noord -America Economist for Capital economy.
“Under those circumstances, the Fed window struck to resume the interest rates at any time in the next 12 to 18 months.”
The new developments “will probably” strengthen “the tendency of the Fed to be on the sidelines and to stay under the radar as much as possible,” JPMorgan Chief Economist Michael Feroli added.
A FED officer, president of Atlanta, Raphael Bostic, said on Monday that he wants to be “careful” when it comes to setting the monetary policy, since the amount of uncertainty is now greater than the end of last year.
Federal Reserve Bank of Atlanta President Raphael Bostic. Reuters/ESA Alexander ·Reuters / Reuters
“I really assume the attitude I have to wait, and there are many things that I will have to wait before I am sure I know which direction policy can go,” Bostic said in Atlanta.
“I don’t want our policy to lean in a direction and assume that the economy is going to evolve a certain way, but then I have to turn around and relax,” he added.
Trump on Sunday did not explain why he thought the Fed made the right decision to pause last week.
But the comments marked a change in tone. On January 23, Trump said he would “demand lower rates” and that he thought the Fed would listen to him. He then said that he expected to talk directly with FED chairman Jerome Powell at the right time ‘.
After the FED last Wednesday had the rates stable in the reach of 4.25%-4.5%, Trump posted a message to his social media platform with the argument that Powell and the Central Bank “the problem they created” not with the have stopped inflation.
He also said that the Fed “did a terrible work” that banks regulated and argued that the institution had spent too much time focused on “dei, gender ideology,” green “energy and fake climate change.”
The president said in that position that he would tackle inflation by “unleashing American energy production, abolishing regulations, re -balancing international trade and reviving American production.”
“I will do much more than stopping inflation, I will make our country powerful again financially and differently!”
Federal Reserve chairman Jerome Powell. (AP Photo/Jacquelyn Martin) ·Associated Press
On Sunday evening, Trump acknowledged that there could be some “pain in the short term” of rates.
“We may have some pain and people understand that, but in the long term, the United States has been scammed by almost every country in the world,” the president said. “We have shortages with almost every country, not every country, but almost, and we are going to change it.”
James Fishback, CEO of investment firm Azoria, said: “Every short -term effects on inflation and growth should be included in the context of the greater goal of President Trump: to revive American production, creating well -paid jobs, curating inflation And increasing the long -term time growth. “
According to him: “The Fed should keep the rates steadily.”
EY Chief Economist Gregory Daco estimates that Trump’s rates on import from Mexico, Canada and China will result by 1.5% in 2026 this year by 1.5% by 1.5%, because higher import costs donate the consumer expenses and business investments .
He said that inflation would rise by 0.7% in the first quarter and on average 0.4% for the year before it gradually relaxes as the demand comes down and the dollar reinforces, causing price gains to compensate.
“The response of the Federal Reserve will be crucial,” said Daco. “If the rates stimulate the inflation expectations higher, the FED can put pressure on to keep rates limited for longer, financial circumstances to tighten and weigh on growth momentum.”
Wilmington Trust Bond Portfolio Manager Wilmer Stith said that he is looking at the impact of the rates as less a threat that leads to higher inflation and more a factor that could exert downward pressure on growth. This can result in lower lower bond returns.
“The way we now look at the rates, we think they can weaken the economic growth of the US and not lower the Fed,” Stith said in an interview.
Stith added that if the labor market weakens, the Fed could still lower the rates.
“The Fed will be very tuned to the weakness of employment,” he said. “However, it is really a jumping ball.”
Bostic, the president of the Atlanta, said on Monday that he generally expects inflation to continue to amount to the purpose of 2% of the FED, although there is now much uncertainty, is changed in the policy of the Trump administration.
Regarding the rates, he said he believes that companies and consumers will bear the victims of those tasks.
Companies in his district, he added, told us that they all expect to pass it on 100%. Now it’s one thing to expect it. It is something else to do it. And so we will actually have to see what happens because if they do it and rebel consumers, they can make a different decision. “
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